China—the trade mark powerhouse

Article  \  3 May 2016

Figures released in April show that China continues to receive more trade mark applications than any other country. This is not altogether surprising given the Chinese emerging market. What is surprising is who is filing these trade mark applications.

The nitty gritty

On 19 April 2016, the Chinese State Administration for Industry and Commerce (SAIC)[1] announced that it had received more than 2.8 million trade mark applications for the year 2015. To put this figure into perspective it’s useful to look at some other numbers[2]:

  • Applications filed in China represent nearly half of all trade marks filed worldwide;
  • China has been the world leader in trade mark filings since 2002;
  • 2.8 million applications represents a four-fold increase on applications filed in China in 2008; and
  • 22,122 applications were filed in New Zealand in 2015.     

As the World Intellectual Property Office (WIPO) Director General Francis Gurry stated in a 2014 press briefing on the growth of Chinese filings, ‘what we see in the intellectual property filing field is a mirror of what we see in the world economy’.

Are foreign companies pushing growth?

When you look at the numbers for China, it seems obvious that foreign companies – who have their products made in China or are seeing China as a desirable market to do business in – account for a large portion of the trade marks filings. It’s no secret that with the first to file system, filing a trade mark application is your best protection to stop counterfeits and infringement.

But, when you dig a bit deeper, filings by foreign companies is only a small part of the story. In 2014, the WIPO released a report which showed that around 90% of trade marks applications in China were filed by Chinese residents (individuals and companies). It is expected that this staggering number will be reflected in the figures for 2015.

The story behind the story

A cynic would say that trade mark squatters are behind the large number of filings by Chinese residents, but the truth is far less scandalous. Chinese companies are simply becoming more IP savvy. This is helped largely by the Chinese government’s five year plans which support innovation and protection of IP. The most recent five year plan was the 12th plan which ran from 2011-2015. Its targets were 7% growth of GDP, an increase of research and development spend as a total of GDP, and 3.3 patents to be held for every 10,000 people[3]. This clearly signifies a shift from exporting to the domestic consumer market.

Also, the success of local companies such as Haier, Huawei and Gree Electric Appliances in developing strong brands has encouraged other Chinese companies to see the value in trade mark rights.

When these factors are combined with the sheer number of Chinese individuals and companies (40,000 companies are incorporated each day!), it is perhaps not surprising that Chinese residents are driving the number of local trade mark filings making China the trade mark powerhouse.

[1] The SAIC is the government agency responsible for administering China’s trade mark system

[2] Figures from SAIC, WIPO and IPONZ

[3] KPMG-China’s 12th Five-Year Plan: Overview March 2011